The President’s new emphasis on the importance of investing in
education, infrastructure, and basic research in order to build the
nation’s long-term competitive capacities is appropriate. For the last
three decades the federal government’s spending on these three
essentials has declined as a percentage of its total spending, arguably
threatening America’s technological and economic leadership.

But the President’s failure to address the decoupling of
American corporate profits from American jobs, and explain specifically
what he’ll do to get jobs back, not only risks making his grand plans
for reviving the nation’s “competitiveness” seem somewhat beside the
point but also cedes to Republicans the dominant narrative.

The
Great Recession wasn’t due to America’s loss of “competitiveness”
relative to the Chinese or anyone else. American corporations
are now enormously competitive, racking up some of their highest
profits in history.

The address he gave last night could have been given (indeed,
was given) by Democrats in the 1980s when Japan seemed to threaten
America’s preeminence. Bill Clinton’s 1992 campaign manifesto,
“Putting People First,” laid out the case. Only now the competitive
threat comes from China.

A
similar call for economic patriotism and public investment emerged in
the 1950s and 1960s, when the competitive threat was the Soviet Union.
John F. Kennedy challenged America to get to the moon ahead of the
Soviets. Before him, Republican president Dwight Eisenhower committed
the nation to building the interstate highways system—forty-one
thousand miles of four-lane (sometimes even six-lane) freeways to
replace the old two-lane federal roads that meandered through cities
and towns—in order to speed troops, tanks, and munitions across the
nation in the event of war. And a National Defense Education Act to
educate a generation of mathematicians and scientists to catch up with
the Soviets in space.

President Obama made the parallel explicit:

Half a century ago, when the Soviets beat us into space with
the launch of a satellite called Sputnik, we had no idea how we’d beat
them to the moon. But after investing in better research and education,
we didn’t just surpass the Soviets’ we unleashed a wave of innovation
that created new industries and millions of new jobs. This is our
generation’s Sputnik moment.

Reviving these ideas, and the feelings they provoke, is
politically astute. A call for national unity and economic patriotism places the President above partisan rancor, and gives him a
rationale for a strong and effective government at a time when
Republicans want nothing so much as to shrink it.

But
the new theme also poses a danger of appearing to ignore the elephant
in the room—the nation’s continuing scourge of high unemployment that
shows little sign of abating any time soon.

It’s one thing to challenge the nation to re-embark on the
equivalent of a race to the moon when most people feel confident about
their own family finances, but quite another when economic insecurity is
as endemic as now.

The President understandably wants Americans to feel upbeat
about the economic recovery—“two years after the worst recession most
of us have ever known, the stock market has come roaring back. Corporate
profits are up. The economy is growing again,” he said—but little of
this has yet trickled down to ordinary people who continue to be
plagued by a huge debt load, business’s unwillingness to create
full-time jobs, and a still fragile housing market.

Although the economy is more than twice as large as it was
thirty years ago, the median wage has barely budged.

The
Great Recession wasn’t due to America’s loss of “competitiveness”
relative to the Chinese or anyone else. In fact, American corporations
are now enormously competitive, racking up some of their highest
profits in history. But much of their success is occurring outside the
United States. GE, whose CEO, Jeffrey Immelt, was just tapped to head
Mr. Obama’s new advisory council on jobs and competitiveness, has more
foreign employees than American. General Motors now sells and makes
more cars in China than at home.

Republicans
and their supply-side economists say the nation got into trouble
because government became too large, and the answer is therefore to cut
spending, cut taxes, and shrink the deficit. The President, having
apparently given up on Keynesian pump-priming, has no retort except to
invest for the long term.

10 Ways to Solve the Jobs ProblemImagine a no-holds-barred “summit” that comes
up with ideas to solve both our job and environmental problems. What
might it come up with?

What
the President should have done is talk frankly about the central
structural flaw in the U.S. economy—the dwindling share of its gains
going to the vast middle class, and the almost unprecedented
concentration of income and wealth at top—in sharp contrast to the
Eisenhower and Kennedy years.

Although the economy is more than twice as large as it was
thirty years ago, the median wage has barely budged. Most of the gains
from growth have gone to the richest Americans, whose portion of total
income soared from around 9 percent in the late 1970s to 23.5 percent
in 2007. Americans kept spending anyway by using their homes as ATMs,
but the bursting of the housing bubble put an end to that—leaving
them without enough purchasing power to reboot the economy. So the
central challenge is to put more money into the pockets of average Americans.

This narrative would be politically risky (opening Mr. Obama
to the charge of being a “class warrior”) but at least honest. And it
would allow him to connect the dots—explaining why his new
health care law is critical to reducing medical costs for most working
families, why tax reform requires cutting taxes on the middle class
while raising them on the rich, why the Bush tax cuts shouldn’t be
extended for the wealthy, why deficit reduction must not sacrifice
education and infrastructure (both important to rebuilding middle-class
prosperity) and why any cuts in Social Security or Medicare must be on
the backs of the wealthy rather than average working families.

Importantly, it would give him a convincing
counter-narrative to the Republican anti-government one. Government
exists to protect and advance the interests of average working
families. Without it, Americans have to rely mainly on big and
increasingly global corporations, whose only interest is making money
wherever it can be made.

Interested?

Giving employers incentives to offer paid time
off would boost employment, stimulate the economy, and help the U.S.
move toward a healthier life-work balance.

Is it time to bring back this Depression-era program?

Why—and how—to make sure the stimulus creates jobs that are both green and equitable.